Nigeria and other African countries are projected for a boom in floating liquified natural gas (FLNG) as the market is set for new capacity.
The development, according to a new report by Wood Mackenzie would specifically enable Nigeria to monetize its stranded offshore gas resources.
Nigeria has about 209 trillion standard cubic feet of associated gas that has not been harnessed due to infrastructure challenges and operating environment.
With challenges currently facing Nigeria LNG Limited, Nigeria’s revenues from LNG exports had declined in the first quarter of 2023 to the lowest in five quarters as security, especially theft, resulted in a drastic drop in associated natural gas production at oilfields.
Nigeria’s earnings from liquefied natural gas exports went down by 18 percent between January and March this year when compared to the third quarter of 2022 and stood at $1.3 billion (622 billion Nigerian naira), per data from the National Bureau of Statistics (NBS).
Wood Mackenzie believes that the floating LNG would provide a leeway for Nigeria to edge the security concerns.
In July this year, Nigerian National Petroleum Company (NNPC) Limited signed a deal with UTM Offshore for the construction of what is claimed to be the country’s first indigenous floating LNG (FLNG) project.
The UTM FLNG project is expected to produce 176 million cubic feet of gas per day from the Yoho Field located in oil mining lease (OML) 104, offshore Nigeria.
The ‘Global FLNG Overview 2023’ of Wood Mackenzie stated that 8.5 million tonnes per annum (mmtpa) of FLNG capacity was sanctioned in 2022 making it clear that after several years in the project doldrums, investor interest in floating is back.
Senior Gas Research Analyst at Wood Mackenzie, Fraser Carson said: “There are 12.5 mmtpa of FLNG projects currently under construction and by 2026, almost 25 mmtpa of floating supply will be operational. With international oil companies (IOCs), upstream producers, and midstream specialists all moving projects towards final investment decisions that could push capacity even higher by 2030.”
Carson noted that after a stuttering start, FLNG is proving to be a reliable commercialization option, adding that the utilization of FLNG facilities in Cameroon and Malaysia has been strong over the last year, with the units producing at close to or above 100 percent of available capacity.”
The report cites Africa as the centre of the current boom in FLNG projects as several resource-rich countries look for solutions that would allow them the option of exporting any gas not utilized on their respective domestic markets.
“FLNG is removed from these above-ground risks such as armed insurgency and infrastructure sabotage. It offers producers a flexible solution to existing challenges,” Carson said.
The report adds that within the last year, experienced FLNG developers Eni and Perenco have sanctioned a two-phase floating development in Congo and a barge-based project in Gabon, respectively.
Source- The Guardian Newspaper.